The firm’s Nicholas D. Siegfried authored an article that appeared as a “Board of Contributors” guest column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. The article, which is titled “Contractor’s Fraudulent Lien Doesn’t Mean Owner Automatically Wins,” focuses on the surprising results of a recent ruling by the Fourth District Court of Appeal involving a contractor’s lien that the lower court found to be fraudulent. His article reads:
For those in the construction industry, the right to impose a lien against the improved property in the event of nonpayment is an effective tool to get paid. Chapter 713, Florida Statutes, as well as countless cases require lienors to prepare their liens accurately and to include only lienable items. The failure to properly prepare a claim of lien can result in a claim for punitive damages and exposure to attorney fees and costs.
However, based upon a Fourth District Court of Appeal case, not all is lost if a contractor’s lien is discharged as fraudulent. In fact, despite a contractor’s fraudulent lien, a contractor can still be deemed the prevailing party in an action against an owner and avoid a claim for attorney’s fees.
In Scott Newman v. Sony Construction et al., the homeowner retained the general contractor to build an addition to his home. When the owner failed to pay, the contractor ceased work, recorded a claim of lien for approximately $134,000 and later recorded a partial release of lien reducing the lien to about $100,000.
The contractor filed suit against the owner for foreclosure of the construction lien, breach of contract and quantum meruit (payments due that are not enforceable under contract). The owner filed a counterclaim against the contractor for fraudulent lien and breach of contract, and the parties subsequently agreed to a bifurcated proceeding whereby the trial court would first determine whether the claim of lien was fraudulent prior to a trial on the remaining issues.
The trial court found that many of the charges included in the lien amount by the contractor were not lienable. These included a charge for approximately $15,000 for supervision and an additional $22,200 for the contractor’s 20 percent profit margin. The trial court found that these charges, which represented a large percentage of the lien, were not supported by the contract between the parties and therefore were not lienable items. It also found other charges included in the lien for pool cleaning chemicals and services, hand tools purchased for use at the job site but not left on the premises after completion, air-conditioning warranty work and rental equipment abandoned by the contractor at the job site were “not lienable by any stretch of the imagination.”